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Panel advances bill to extend mortgage forbearance for wildfire survivors amid industry concerns about federal guidelines
Summary
The Assembly Banking and Finance Committee voted to pass AB 238 and refer it to the Assembly Judiciary Committee; the bill would allow wildfire-affected homeowners to request an initial mortgage forbearance for up to 180 days with an option to extend for up to one year.
The Assembly Banking and Finance Committee voted to pass AB 238 and referred the measure to the Assembly Committee on Judiciary after testimony about wildfire damage in Los Angeles County and negotiations with mortgage servicers and federal loan programs.
Assemblymember Harabedian, who authored AB 238, told the committee that whole neighborhoods were “wiped out” by recent fires and that survivors face the risk of foreclosure as they attempt to rebuild. Harabedian said AB 238 would allow borrowers affected by wildfires to request an initial mortgage forbearance for up to 180 days, with the option to extend relief for up to one year. She said an earlier industry agreement provided 90 days of forbearance without documentation or balloon payments, but argued longer relief is necessary for many survivors.
Renee Bayardo, reading testimony for HPP CARES, told the committee wildfire survivors often evacuated without documents and face the prospect of paying both rent and mortgage for homes that may be destroyed. Bayardo described AB 238 as a “viable solution” that would pause mortgage payments up to 360 days without accruing additional interest, penalties or negative credit reporting — language she urged the committee to retain in amendments.
Industry witnesses, including Vanessa Lugo of the California Bankers Association and Indira McDonald of the California Mortgage Bankers Association, said lenders and servicers have been proactive in offering relief but raised concerns that the bill as drafted could conflict with investor guidelines governed by Fannie Mae, Freddie Mac and federal agencies. Lugo and McDonald asked the author to amend the measure so servicers who follow existing federal loss-assistance programs (for loans backed by GSEs or insured by FHA, VA or USDA) would be deemed in compliance with state law.
Committee members expressed support for the bill’s intent while urging the author to narrow language and work with stakeholders. Several members noted they expect amendments to add documentation check-ins after the initial forbearance period and to address potential conflicts with investor servicing contracts.
The committee recorded a 6-0 vote in favor of passing AB 238 to Judiciary, holding the roll open briefly but ultimately moving without opposition. Supporters and industry representatives said they will continue negotiations as the bill advances to further committees.
Votes at a glance: AB 238 (Harabedian) — passed to Judiciary, vote 6-0.
